On November 12, the U.S. Court of Appeals for the Fifth Circuit denied a request from Community Financial Services Association of America (CFSA) and the Consumer Services Alliance of Texas to reopen their legal challenge against the Consumer Financial Protection Bureau’s (CFPB) payday loan rule. This decision effectively clears the path for the rule to be implemented.

In its order, the three-judge panel stated that “[b]ecause no member of the panel or judge in regular active service requested that the court be polled on rehearing en banc, the petition for rehearing en banc is DENIED.”

The case challenged a 2017 CFPB regulation aimed at certain payday lending practices. In 2022, the Fifth Circuit voided the rule by declaring the CFPB’s funding structure unconstitutional. The U.S. Supreme Court overturned that decision in May. 

In October 2021, the Fifth Circuit granted an order extending the compliance date for the rule until 286 days after resolution of the appeal. The appeal has now been resolved, in favor of the CFPB, and the period to the compliance date has now started running. By our calculations, the compliance date should be August 25, 2025.

Our Take:

In June 2024, the CFPB posted a blog announcing: “Now that the appeal is over, the rule is on track to take effect. An existing court order pausing the rule is set to expire 286 days after the Supreme Court enters its judgment in the payday lenders’ case, which the Court is expected to do on June 17. As a result, the rule should go into effect on March 30, 2025.” Despite the CFSA’s subsequent petition for rehearing en banc, the CFPB has never corrected this statement. Given the extraordinary measures the rule requires of payday and many installment lenders, the CFPB’s announced implementation date and failure to acknowledge the impact of the rehearing en banc have generated considerable undue industry concern. In our view, the CFPB should promptly announce that compliance with the rule will be required on August 25, 2025 — not March 30, 2025 — assuming, of course, that the CFPB does not revisit the rule (as we think it should, see discussion here) under a director appointed by President-Elect Trump. Any attempt by the CFPB to enforce compliance before August 25, 2025 is likely to lead to further litigation.